Form 8-B
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Registration of Securities of Certain Successor Issuers
Filed Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
HSB Group, Inc.
(Exact name of registrant as specified in its charter)
Connecticut 06-1475343
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
P.O. Box 5024
One State Street
Hartford, CT 06102-5024
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class to be so registered Name of each exchange on which
registered Common Stock, without par value New York Stock Exchange, Inc. Rights
to Purchase Depositary Receipts New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
<PAGE>
Item 1. General Information
(a) HSB Group, Inc. (the "Registrant") was incorporated on February 20,
1997 under the laws of the State of Connecticut.
(b) The Registrant's fiscal year ends December 31.
Item 2. Transaction of Succession
(a) The Hartford Steam Boiler Inspection and Insurance Company ("Hartford
Steam Boiler"), the predecessor of the Registrant, has securities registered
pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the "Act").
(b) Pursuant to an Agreement and Plan of Share Exchange dated March 19,
1997 between the Registrant and Hartford Steam Boiler ("Share Exchange"),
subject to the exercise and perfection of dissenting stockholders' appraisal
rights, each outstanding share of Hartford Steam Boiler common stock, without
par value (including the associated rights to purchase depositary receipts)
("Hartford Steam Boiler Common Stock") will be exchanged for one share of common
stock, without par value (including the associated rights to purchase depositary
receipts), of the Registrant ("HSB Group Common Stock"), at the effective time
of the Share Exchange (the "Effective Time" as defined in the Agreement and Plan
of Share Exchange). In addition, each share of HSB Group Common Stock
outstanding immediately prior to the Effective Time will be canceled and
restored to the status of an authorized but unissued share of HSB Group Common
Stock.
At the Effective Time, the Articles of Incorporation and Bylaws of
Registrant and the Charter and Bylaws of Hartford Steam Boiler were
substantially similar. A description of the differences between these documents
is set forth in the Prospectus and Proxy Statement dated May 13, 1997 for the
June 23, 1997 Special Meeting of Stockholders of Hartford Steam Boiler (the
"Prospectus and Proxy Statement") which is incorporated by reference as Exhibit
2(ii) hereto. The text of the Articles of Incorporation and Bylaws of HSB Group
are attached as Exhibits 3(i) and 3(ii) hereto.
Pursuant to the Agreement and Plan of Share Exchange, at the Effective
Time, the Registrant will assume each employee benefit plan and program of
Hartford Steam Boiler, and each share of Hartford Steam Boiler Common Stock and
each option, unit or right then issued and outstanding under such plans at the
Effective Time will be converted into an equivalent number of shares, options,
units or rights, respectively, of HSB Group Common Stock, at the same per share
price, if applicable, and on the same terms and subject to the same conditions
as in effect immediately prior to the Effective Time, and any restricted shares
awarded under such plans as to which the restrictions have not lapsed as of the
Effective Time will be converted into the same number of shares of HSB Group
Common Stock carrying identical restrictions.
Pursuant to the Agreement and Plan of Share Exchange, at the Effective
Time, the Registrant will assume the rights and obligations of Hartford Steam
Boiler under the Rights Agreement dated November 28, 1988 between Hartford Steam
Boiler and The First National Bank of Boston, as Rights Agent (the "Rights
Agreement"), and, by virtue of the Share Exchange, each right (a "Right") to
purchase Hartford Steam Boiler Junior Participating Preferred Shares, no par
value (the "Hartford Steam Boiler Junior Participating Preferred Shares") and to
otherwise exercise options, rights and privileges, issued pursuant to the Rights
Agreement shall be converted into and become a right to purchase an equivalent
number or amount of Junior Participating Preferred Shares, no par value, of the
Registrant (the "HSB Group Junior Participating Preferred Shares") at the same
exercise price and upon the same terms and subject to the same conditions as
were applicable immediately prior to the Effective Time and to otherwise
exercise options, rights and other privileges pursuant to the Rights Agreement.
The Share Exchange was approved by the stockholders of Hartford Steam
Boiler at the Special Meeting of Stockholders held on June 23, 1997. The
Effective Time of the Share Exchange is June 24, 1997.
Item 3. Securities to be Registered
1) Number of Shares Presently Authorized: The Articles of Incorporation of the
Registrant authorize (a) 50,000,000 shares of HSB Group Common Stock, and (b)
500,000 shares of preferred stock, no par value (the "HSB Group Preferred
Stock") of which (i) 250,000 are designated as Series A Junior Participating
Preferred Shares; and (ii) 2,000 of which are designated as Series B Convertible
Preferred Shares.
2) Presently issued: At the Effective Time, the Registrant will have outstanding
the same number of shares of HSB Group Common Stock and HSB Group Preferred
Stock as there were outstanding shares of Hartford Steam Boiler Common Stock and
Hartford Steam Boiler Preferred Stock as of such time. As of June 20, 1997,
19,775,598 shares of Hartford Steam Boiler Common Stock, each of which had
attached thereto a Right, and 2,000 shares of Hartford Steam Boiler Series B
Convertible Preferred Shares were issued and outstanding.
3) Presently issued which are held by or for accounts of the Registrant: None.
Item 4. Description of the Registrant's Securities to be Registered
At the Effective Time, the authorized capital stock of the Registrant will
consist of 50,000,000 shares of HSB Group Common Stock and 500,000 shares of HSB
Group Preferred Stock, of which 250,000 shares have been designated as Series A
Junior Participating Preferred Stock and 2,000 shares have been designated as
Series B Convertible Preferred Stock.
The following statements with respect to HSB Group Common Stock and the Rights
are brief summaries of certain provisions of the Articles of Incorporation and
the Bylaws, both of which are filed as exhibits hereto and are incorporated by
reference herein and made a part hereof.
The Articles of Incorporation authorize the Registrant's Board of Directors to
issue, fix and determine the terms, limitations and relative rights and
preferences of the preferred stock, including any voting rights thereof, to
divide and issue the preferred stock in series, to fix and determine the
variations among series to the extent permitted by law and to provide that
shares of the preferred stock, or any series thereof, may be convertible into
the same or a different number of shares of common stock.
Holders of Common Stock are entitled to one vote for each share held of record
on matters submitted to the Registrant's shareholders. There are no cumulative
voting rights. Shares of Common Stock are not redeemable and have no conversion
or similar rights and there are no sinking fund provisions. There are no
preemptive rights to purchase or subscribe to any shares of any class of stock
of the Registrant, or to any securities convertible into shares of any class of
stock of the Registrant. There are no restrictions on alienability. Holders of
Common Stock are entitled to share ratably in such dividends as may be declared
by the Board of Directors from funds legally available for such purpose and in
all assets remaining upon liquidation or dissolution of the Company, subject to
any prior rights of any holders of Preferred Stock. The shares of Registrant
Common Stock outstanding immediately prior to the Effective Time are fully paid
and non-assessable, and following the Effective Time, the Registrant Common
Stock to be issued in the Share Exchange will, when so exchanged in accordance
with the terms of the Agreement and Plan of Share Exchange, be fully paid and
nonassessable when so issued.
The Articles of Incorporation contain provisions which establish a classified
Board of Directors, provide that the number of directors comprising the Board of
Directors shall be fixed from time to time by a resolution adopted by the
affirmative vote of a majority of the entire Board of Directors, provide for the
removal of directors by the shareholders only for cause by an 80% vote of the
shareholders and for the filling of Board vacancies by the Board. These
provisions require an 80% vote of shareholders to be amended and may delay,
defer or prevent a change in control of the Registrant.
The Articles of Incorporation also contain certain requirements that must be met
in order for a business combination between the Registrant and a 10% shareholder
to take place. If a proposed business combination does not meet specified "fair
price" conditions, then the transaction would require approval by the
affirmative vote of not less than 80% of the votes entitled to be cast by the
holders of all of the then outstanding shares of voting stock of the Registrant,
unless the business combination is approved by a majority of the directors not
affiliated with the 10% shareholder. If the conditions are met, the business
combination would be subject to the voting requirements otherwise applicable
under Connecticut law, which for most types of business combinations is the
approval by each voting group entitled to vote separately on the plan by a
majority of all votes entitled to be cast on the plan by that voting group. If
the 80% shareholder vote is obtained in connection with a particular proposed
business combination, then the specified conditions would not have to be met and
approval by a majority of the directors would not be necessary. These "fair
price" provisions may have the effect of delaying, deferring, or preventing a
change in control of the Registrant.
As described above under Item 2(b), at the Effective Time, the Registrant will
assume Hartford Steam Boiler's rights and obligations under the Rights
Agreement, and each Right issued under the Rights Agreement to purchase Series A
Junior Participating Preferred Stock of Hartford Steam Boiler will be converted
into and become a Right to purchase an equivalent number or amount of HSB Group
Series A Junior Participating Preferred Stock at the same exercise price and
upon the same terms and subject to the same conditions as were applicable
immediately prior to the Effective Time.
A description of the Rights issued pursuant to the Rights Agreement is set forth
in a Registration Statement on Form 8-A filed with the Securities and Exchange
Commission on April 21, 1990, which is incorporated by reference herein and made
a part hereof, and in the Articles of Incorporation of HSB Group, Inc. which is
attached hereto as Exhibit 3(i).
Item 5. Financial Statements and Exhibits
(a) Financial Statements
No financial statements are required to be filed with this registration
statement because the capital structure and balance sheet of the Registrant
immediately after the succession were substantially the same as those of
the Predecessor.
(b) Exhibits
Exhibit
Number Description
- ------- -----------
(2)(i) Agreement and Plan of Share Exchange dated March 19, 1997
between The Hartford Steam Boiler Inspection and Insurance
Company and HSB Group, Inc.
(2)(ii) Prospectus and Proxy Statement dated May 13, 1997 (incorporated
by reference to the Form S-4 Registration Statement File No.
333-22469).
(3)(i) Articles of Incorporation of HSB Group, Inc., as amended and
restated effective June 13, 1997.
(3)(ii) By-laws of HSB Group, Inc.
(4)(i) Rights Agreement dated November 28, 1988 between The Hartford
Steam Boiler Inspection and Insurance Company and The First
National Bank of Boston, as Rights Agent; incorporated by
reference to Exhibit 4(i) to The Hartford Steam Boiler Inspection
and Insurance Company's Form 10-K for the year ended December 31,
1995.
(4)(iii) Instruments defining the rights of holders of long-term debt of
the Registrant are not being filed since the total amount of
securities authorized under each such instrument does not exceed
ten percent of the total assets of the Registrant and its
subsidiaries on a consolidated basis. The Registrant shall
furnish copies of such instruments to the Securities and Exchange
Commission upon request.
(10)(i)(a) Lease Agreement between The Hartford Steam Boiler Inspection
and Insurance Company and One State Street Limited Partnership;
incorporated by reference to Exhibit (10)(i) to The Hartford
Steam Boiler Inspection and Insurance Company's Form 10. File No.
0-13300, filed March 18, 1985.
(b) Transaction Agreement between The Hartford Steam Boiler
Inspection and Insurance Company and General Reinsurance
Corporation dated December 30, 1994; incorporated by reference to
Exhibit 2 to The Hartford Steam Boiler Inspection and Insurance
Company's Current Report on Form 8-K. File No. 0-13300, filed
January 17, 1995.
(c) Contribution Agreement among The Hartford Steam Boiler
Inspection and Insurance Company, The Dow Chemical Company, Dow
Environmental Inc. and Radian Corporation dated January 30, 1996;
incorporated by reference to Exhibit 99.1 to The Hartford Steam
Boiler Inspection and Insurance Company's Current Report on Form
8-K. File No. 0-13300, filed February 14, 1996.
(d) Limited Liability Company Agreement between Radian Corporation
and Dow Environmental Inc. dated January 30, 1996; incorporated
by reference to Exhibit 99.2 to The Hartford Steam Boiler
Inspection and Insurance Company's Current Report on Form 8-K.
File No. 0-13300, filed February 14, 1996.
(10)(iii)(a) Employment Agreement dated February 3, 1997 between The Hartford
Steam Boiler Inspection and Insurance Company and various
executive officers; incorporated by reference to Exhibit
(10)(iii)(a) to The Hartford Steam Boiler Inspection and
Insurance Company's Form 10-K for the year ended 12/31/96.*
(b) The Hartford Steam Boiler Inspection and Insurance Company
Long-Term Incentive Plan, as amended and restated effective
December 23, 1996; incorporated by reference to Exhibit
(10)(iii)(b) to The Hartford Steam Boiler Inspection and
Insurance Company's Form 10-K for the year ended 12/31/96.*
(c) The Hartford Steam Boiler Inspection and Insurance Company
Short-Term Incentive Plan, as amended and restated December 23,
1996; incorporated by reference to Exhibit (10)(iii)(c) to The
Hartford Steam Boiler Inspection and Insurance Company's Form
10-K for the year ended 12/31/96. *
(d) The Hartford Steam Boiler Inspection and Insurance Company 1985
Stock Option Plan, as amended and restated December 23, 1996;
incorporated by reference to Exhibit (10)(iii)(d) to The Hartford
Steam Boiler Inspection and Insurance Company's Form 10-K for the
year ended 12/31/96. *
(e) The Hartford Steam Boiler Inspection and Insurance Company 1995
Stock Option Plan, amended and restated effective December 23,
1996; incorporated by reference to Exhibit (10)(iii)(e) to The
Hartford Steam Boiler Inspection and Insurance Company's Form
10-K for the year ended 12/31/96.*
(f) Pre-Retirement Death Benefit and Supplemental Pension Agreement
between The Hartford Steam Boiler Inspection and Insurance
Company and various executive officers, as amended and restated
effective March 14, 1997; incorporated by reference to Exhibit
(10)(iii)(f) to The Hartford Steam Boiler Inspection and
Insurance Company's Form 10-K for the year ended 12/31/96.*
(g) Pre-Retirement Death Benefit and Supplemental Pension Agreement
between The Hartford Steam Boiler Inspection and Insurance
Company and William A. Kerr, dated March 14, 1997; incorporated
by reference to Exhibit (10)(iii)(g) to The Hartford Steam Boiler
Inspection and Insurance Company's Form 10-K for the year ended
12/31/96. *
(h) Pre-Retirement Death Benefit and Supplemental Pension Agreement
between The Hartford Steam Boiler Inspection and Insurance
Company and Robert C. Walker, dated March 14, 1997; incorporated
by reference to Exhibit (10)(iii)(h) to The Hartford Steam Boiler
Inspection and Insurance Company's Form 10-K for the year ended
12/31/96.*
(i) Retirement Plan for Outside Directors, as amended and restated
October 24, 1988; incorporated by reference to Exhibit
(10)(iii)(e) to The Hartford Steam Boiler Inspection and
Insurance Company's Form 10-K for the year ended December 31,
1993. *
(j) The Hartford Steam Boiler Inspection and Insurance Company
Directors Stock and Deferred Compensation Plan; incorporated by
reference to Exhibit (10)(iii)(j) to The Hartford Steam Boiler
Inspection and Insurance Company's Form 10-K for the year ended
12/31/96.*
(k) Description of certain arrangements not set forth in any formal
documents, as described on pages 6 - 7 , with respect to
directors' compensation, and on pages 9 -16, with respect to
executive officer's compensation, which pages are incorporated by
reference to The Hartford Steam Boiler Inspection and Insurance
Company 's Proxy Statement dated March 26, 1997. *
(21) Subsidiaries of the Registrant.
(27) Financial Data Schedule. (incorporated by reference to Exhibit
27 of The Hartford Steam Boiler Inspection and Insurance
Company's Form 10-K for the year ended December 31, 1996).
* Management contract, compensatory plan or arrangement required to be filed as
an exhibit.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
HSB Group, Inc.
Date: June 25, 1997 By: /s/ R. Kevin Price
R. Kevin Price
Senior Vice President and
Corporate Secretary
Exhibit (2)
AGREEMENT AND PLAN OF SHARE EXCHANGE
OF
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
AND
HSB GROUP, INC.
This Agreement and Plan of Share Exchange (the "Agreement" or "Plan of
Exchange") is dated and executed as of the 19th day of March, 1997, by and
between THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY, a
Connecticut corporation (the "Insurance Company"), and HSB GROUP, INC., a
Connecticut corporation (the "Holding Company").
1. The name of the Insurance Company is The Hartford Steam Boiler Inspection
and Insurance Company, a Connecticut corporation, and the name of the
Holding Company is HSB Group, Inc., a Connecticut Corporation.
2. The designation and number of authorized and outstanding shares of the
Holding Company are: 18,000 shares of common stock (the "Holding Company
Common Shares"), each of which is entitled to one vote and 100 shares of
which are issued and outstanding and 2,000 authorized preferred shares,
none of which are issued and outstanding. Immediately prior to the
Effective Time (as hereinafter defined), the designation and number of
authorized shares of the Holding Company will be: (a) 50,000,000 Holding
Company Common Shares, each of which will have attached thereto a Right (as
defined below); and (b) 500,000 shares of preferred stock, no par value
(the "Holding Company Preferred Shares"), of which (i) 250,000 will be
designated as Series A Junior Participating Preferred Shares(the "Holding
Company Junior Preferred Shares"), each of which will be entitled to 200
votes, voting together with the Holding Company Common Shares, and (ii)
2,000 will be designated as Series B Convertible Preferred Shares (the
"Holding Company Convertible Shares"), each of which will be entitled to
199 votes, voting together with the Holding Company Common Shares, and with
respect to certain matters voting as a separate class.
The designation and number of authorized and outstanding shares of the
Insurance Company are: (a) 50,000,000 shares of common stock, no par value
(the "Insurance Company Common Shares"), each of which is entitled to one
vote, 20,043,608 shares of which were, as of March 19, 1997, issued and
outstanding and 29,956,392 shares of which were, as of March 19, 1997, held
as authorized and unissued shares of the Insurance Company, and which in
each case have attached thereto a Right; and (b) 500,000 authorized
preferred shares, no par value (the "Insurance Company Preferred Shares"),
of which (i) 250,000 are designated Series A Junior Participating Preferred
Shares (the "Insurance Company Junior Preferred Shares"),each of which is
entitled to 200 votes, voting together with the Insurance Company Common
Shares, and none of which is outstanding, and (ii) 2,000 shares are
designated as Series B Convertible Preferred Shares (the "Insurance Company
Convertible Preferred Shares"), each of which is entitled to 199 votes,
voting together with the Insurance Company Common Shares, and with respect
to certain matters voting as a separate class, and all of which were, as of
March 19, 1997, issued and outstanding.
For adoption and approval, this Plan of Exchange shall require the approval
of two-thirds of all outstanding Insurance Company Common Shares and
Insurance Company Convertible Preferred Shares voting together as a single
class.
3. Upon the time of filing of a Certificate of Exchange in connection with the
share exchange contemplated hereby (the "Share Exchange") with the
Secretary of State of the State of Connecticut (the "Effective Time"):
(a) each outstanding Insurance Company Common Share (and associated Right)
and each outstanding Insurance Company Convertible Preferred Share shall by
operation of law and without further action be exchanged for one Holding
Company Common Share (and associated Right) and one Holding Company
Convertible Preferred Share, respectively, subject to dissenting
stockholders' rights under Sections 33-855 to 33-872, inclusive of the
Connecticut Business Corporation Act (the "CBCA"); and
(b) each Holding Company Common Share outstanding immediately prior to the
Effective Time shall be canceled and shall be restored to the status of an
authorized but unissued Holding Company Common Share;
so that, immediately after the Effective Time, all of the
outstanding Insurance Company Common Shares and Insurance
Company Convertible Preferred Shares will be held by the
Holding Company, and all of the outstanding Holding Company
Common Shares and Holding Company Convertible Preferred Shares
will be held by the owners of the Insurance Company Common
Shares and Insurance Company Convertible Preferred Shares,
respectively, that were outstanding immediately prior to the
Effective Time.
4. By the Holding Company's having executed this Agreement and by the
subsequent consummation of the transactions enumerated herein, the Holding
Company shall be deemed to have approved the following plans of the
Insurance Company (collectively, the "Plans"): the 1985 and 1995 Stock
Option Plans; the Retirement Plan; the Excess Retirement Plan; the Thrift
Incentive Plan; the Leveraged Employee Stock Ownership Plan; the Long-Term
and Short-Term Incentive Plans; the Directors Stock and Deferred
Compensation Plan; the Service Award Plan; employment agreements; and all
other employee benefit plans or programs of the Insurance Company; and, by
virtue of the Share Exchange and without any action on the part of the
participants in the Plans, each Insurance Company Common Share and each
option, unit or right then issued and outstanding under the Plans shall be
converted into an equivalent number of shares, options, units or rights,
respectively, of Holding Company Common Shares, at the same per share
price, if applicable, and upon the same terms and subject to the same
conditions as applicable immediately prior to the Effective Time to the
relevant share, option, unit or right, and any restricted shares awarded
under such Plans as to which the restrictions have not lapsed as of the
Effective Time of the Share Exchange, will be converted into the same
number of Holding Company Common Shares carrying identical restrictions.
To the extent deemed necessary or appropriate, Holding Company and
Insurance Company shall make appropriate amendments to the Plans to reflect
the adoption thereof as the Plans of Holding Company without adverse effect
upon any of the options and shares outstanding under the Plans.
5. At the Effective Time, the Holding Company will assume the Insurance
Company's rights and obligations pursuant to the Rights Agreement, dated as
of November 28, 1988 between the Insurance Company and The First National
Bank of Boston, as Rights Agent (the "Rights Agreement"), and by virtue of
the Share Exchange, and without any action on the part of the holder
thereof, each right (a "Right") to purchase Insurance Company Junior
Preferred Shares and to otherwise exercise options, rights and privileges,
issued pursuant to the Rights Agreement shall be converted into and become
a right to purchase an equivalent number or amount of Holding Company
Junior Preferred Shares, at the same exercise price, and upon the same
terms and subject to the same conditions, as applicable immediately prior
to the Effective Time and to otherwise exercise options, rights and other
privileges pursuant to the Rights Agreement. The Holding Company will
reserve, for purposes of issuance pursuant to the Rights Agreement, a
number of Holding Company Junior Preferred Shares equivalent to the number
of Insurance Company Junior Preferred Shares reserved by the Insurance
Company for such purposes immediately prior to the Effective Time.
6. At the Effective Time, each certificate evidencing ownership of Insurance
Company Common Shares (and associated Rights) and Insurance Company
Convertible Preferred Shares outstanding at the Effective Time shall
automatically, and without any action by the holder thereof, be deemed to
evidence an equivalent number of Holding Company Common Shares (and
associated Rights) or Holding Company Convertible Preferred Shares,
respectively, subject to dissenting stockholders' rights under Sections
33-855 to 33-872, inclusive, of the CBCA.
7. At the Effective Time, the board of directors and executive officers of the
Insurance Company shall become the board of directors and executive
officers of the Holding Company. The executive officers of the Holding
Company shall be identified as follows: Gordon W. Kreh, President and Chief
Executive Officer; Saul L. Basch, Senior Vice President, Treasurer and
Chief Financial Officer; Michael L. Downs, Senior Vice President; John J.
Kelley, Senior Vice President; William A. Kerr, Senior Vice President; R.
Kevin Price, Senior Vice President and Corporate Secretary; William
Stockdale, Senior Vice President; and Robert C. Walker, Senior Vice
President and General Counsel.
8. Immediately prior to, and at, the Effective Time, the articles of
incorporation of the Holding Company shall be as set forth in Exhibit A to
this Agreement.
9. The Plan of Exchange shall be conditioned upon:
(a) receipt of the requisite vote of stockholders of the Insurance Company
pursuant to Section 33-817 of the CBCA;
(b) approval or exemption of the insurance regulatory authorities in
Connecticut, Texas, the United Kingdom and Hong Kong, or any other
consents, approvals or exemptions necessary or appropriate for the
consummation of the Share Exchange, in form and substance satisfactory to
the Insurance Company and the Holding Company;
(c) the effectiveness of a Registration Statement under the Securities Act
of 1933 relating to the common stock of Holding Company to be issued or
reserved for issuance in connection with the Share Exchange;
(d) authorization for listing, subject to official notice of issuance, of
the Holding Company Common Shares (and associated Rights) on the New York
Stock Exchange, Inc.;
(e) receipt of an opinion of Skadden, Arps, Slate, Meagher & Flom
(Illinois), tax counsel for the Insurance Company, regarding certain
federal income tax consequences of the Share Exchange;
(f) receipt of an opinion of counsel as to the legality of the Holding
Company Common Shares and Holding Company Convertible Preferred Shares
issuable in connection with the Share Exchange; and
(g) the absence of any injunction prohibiting or restricting in any manner
the Share Exchange or the operation of the Holding Company, the Insurance
Company or any of their subsidiaries after consummation of such Share
Exchange.
10. At any time before or after the adoption of this Agreement by the
stockholders of the Insurance Company, this Agreement may be amended or
modified or certain of its conditions waived by the boards of directors of
the Holding Company and the Insurance Company or authorized committees of
such boards; provided that no such amendment, modification or waiver may
affect the rights of any stockholder of the Insurance Company in any manner
that is materially adverse to such stockholder in the judgment of the board
of directors of the Insurance Company. The Plan of Exchange may be
abandoned by either the Insurance Company or the Holding Company,
notwithstanding the approval of the Plan of Exchange by the stockholders of
the Insurance Company, at any time prior to the Effective Time, if for any
reason the board of directors of either of such corporations determines
that it is inadvisable to proceed with the Plan of Exchange, including
without limitation, giving consideration to the number of shares for which
dissenting stockholders' rights pursuant to Sections 33-855 to 33-872,
inclusive, of the CBCA have been exercised and the cost to the Insurance
Company thereof.
11. The Insurance Company and the Holding Company, respectively, shall take all
such action as may be necessary or appropriate in order to effectuate the
Share Exchange and the other transactions contemplated by this Agreement.
If, at any time after the Effective Time, any further action is necessary
or desirable to carry out the purposes of this Agreement, the officers and
directors of each of the Holding Company and the Insurance Company, as of
the Effective Time, shall take such further action.
THE HARTFORD STEAM BOILER
INSPECTION AND INSURANCE COMPANY
a Connecticut corporation
By: /s/ Gordon W. Kreh
Its: President and Chief Executive
Officer
HSB GROUP, INC.
a Connecticut corporation
By: /s/ Gordon W. Kreh
Its: President and Chief Executive
Officer
Exhibit (3)(i)
CERTIFICATE OF INCORPORATION
of
HSB GROUP, INC.
Article I
The name of the Corporation is HSB Group, Inc.
Article II
The address of the registered office of the Corporation is One State Street,
Hartford, Connecticut, 06102-5024. The name of the registered agent at that
address is R. Kevin Price.
Article III
The nature of the business to be transacted, and the purposes to be promoted or
carried out by the Corporation, are to engage in any lawful act or activity for
which corporations may be formed under the Connecticut Business Corporation Act
or any successor statute thereto.
Article IV
A. The authorized number of shares, which may be increased from time to time
when and if authorized by the shareholders shall consist of 50,000,000
shares of common stock and 500,000 shares of preferred stock, of which
250,000 shares have been designated as "Series A Junior Participating
Preferred Stock" and 2,000 shares have been designated as "Series B
Convertible Preferred Stock".
B. The Board of Directors is authorized to fix and determine the terms,
limitations and relative rights and preferences of the preferred stock
including, without limitation, any voting rights thereof, to divide and
issue the preferred stock in series, to fix and determine the variations
among series to the extent permitted by law and to provide that shares of
the preferred stock, or any series thereof, may be convertible into the
same or a different number of shares of common stock. No shareholder shall
have any preemptive right to purchase or subscribe to any shares of any
class of stock of the Corporation, whether now or hereafter authorized, or
to any securities convertible into shares of any class of stock of the
Corporation.
C. The designations, voting powers, preferences and relative, participating,
optional and other special rights of the Series A Junior Participating
Preferred Stock, and the qualifications, limitations or restrictions
thereof are as follows:
1. Designation and Amount.
The shares of such series shall be designated as "Series A Junior
Participating Preferred Stock" and the number of shares constituting
such series shall be 250,000.
2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect
to dividends, the holders of shares of Series A Junior Participating
Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last business day
of January, April, July and October in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date ), commencing
on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $12.00 or (b) subject to the provision for
adjustment hereinafter set forth, 200 times the aggregate per share
amount of all cash dividends, and 200 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, without
par value, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at
any time after November 28, 1988 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in
each such case the amount to which holders of shares of Series A
Junior Participating Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Series
A Junior Participating Preferred Stock as provided in Paragraph 2.(a)
above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $12.00 per share on the Series A
Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series A Junior Participating Preferred stock unless
the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares or
unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Junior Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of
shares of Series A Junior Participating Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed for
the payment thereof.
3. Voting Rights.
The holders of shares of Series A Junior Participating Preferred Stock
shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 200 votes on all matters submitted to a vote of
the shareholders of the Corporation. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common stock payable in shares of Common Stock (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of shares
of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(c) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period")
which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the
Series A Junior Participating Preferred Stock) with dividends in
arrears in an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right to
elect two (2) Directors.
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii)
of this Section 3.(c). or at any annual meeting of shareholders, and
thereafter at annual meetings of shareholders, provided that neither
such voting right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the authorized
number of Directors shall be exercised unless the holders of ten
percent (10%) in number of shares of Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of the
holders of Common Stock shall not affect the exercise by the holders
of Preferred Stock of such voting right. At any meeting at which the
holders of Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting
as a class, to elect Directors to fill such vacancies, if any in the
Board of Directors as may then exist up to two (2) Directors or, if
such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special
meeting does not amount to the required number, the holders of the
Preferred Stock shall have the right to make such increase in the
number of Directors as shall be necessary to permit the election by
them of the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any default
period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with
the Series A Junior Participating Preferred Stock.
(iii)Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any shareholder or
shareholders owning in the aggregate not less than ten percent (10%)
of the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of special meeting of
the holders of Preferred Stock, which meeting shall thereupon be
called by the President, a Vice-President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this
paragraph 3(c)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his last
address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 20 days and not
later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request,
such meeting may be called on similar notice by any shareholder or
shareholders owning in the aggregate not less than ten percent (10%)
of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph 3(c)(iii), no such
special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of
the shareholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of Directors until the holders
of Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Stock shall continue
in office until their successors shall have been elected by such
holders or until the expiration of the default period and (y) any
vacancy in the Board of Directors may (except as provided in paragraph
3(c)(ii) of this Section) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of
stock which elected the Director whose office shall have become
vacant. References in this paragraph 3.(c) to Directors elected by the
holders of a particular class of stock shall include Directors elected
by such Directors to fill vacancies as provided in clause (y) of the
foregoing sentence.
(v) Immediately upon the expiration of a default period,(x) the right
of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of
Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the
certificate of incorporation or bylaws irrespective of any increase
made pursuant to the provisions of paragraph 3(c)(ii) (such number
being subject, however, to change thereafter in any manner provided by
law or in the certificate of incorporation or bylaws). Any vacancies
in the Board of Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(d) Except as set forth herein, holders of Series A Junior Participating
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Junior Participating Preferred Stock;
(ii)declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior Participating
Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii)redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Junior Participating Preferred Stock, provided
that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred
Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior
Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of
the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time
and in such manner.
5. Reacquired Shares.
Any shares of Series A Junior Participating Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on
issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series A Junior Participating Preferred Stock shall have
received $200 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the
date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders
of shares of Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference
by (ii) 200 (as appropriately adjusted as set forth in paragraph 6(c)
below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series A Junior
Participating Preferred Stock and Common Stock, respectively, holders
of Series A Junior Participating Preferred Stock and holders of shares
of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on
a per share basis, respectively.
(b) In the event, however that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock if
any, which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there
are not sufficient assets available to permit payment in full of the
Common Adjustment then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(c) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case the shares of Series A Junior
Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 200 times the aggregate
amount of stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change
of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
8. Optional Redemption.
(a) The Corporation shall have the option to redeem the whole or any part
of the Series A Junior Participating Preferred Stock at any time at a
redemption price equal to, subject to the provision for adjustment
hereinafter set forth, 200 times the "current per share market price"
of the Common Stock on the date of the mailing of the notice of
redemption, together with unpaid accumulated dividends to the date of
such redemption. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares or (iv) issue any shares by reclassification
of its shares of Common Stock, then in each such case the amount to
which holders of shares of Series A Junior Participating Preferred
Stock shall be otherwise entitled immediately prior to such event
under the immediately preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which shall be
the number of shares of Common Stock outstanding immediately after
such event and the denominator of which shall be the number of shares
of Common Stock that shall have been outstanding immediately prior to
such event. The "current per share market price" on any date shall be
deemed to be the average of the closing prices per share of such
Common Stock for the 10 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date. The closing price
for each day shall be the last sale price, regular way, or, in case no
such sale shall take place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock shall not be listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the principal national securities
exchange on which the Common Stock shall not be listed or admitted to
trading or, if the Common Stock shall not be listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use or, if on any such date the Common Stock
shall not be quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the Board of
Directors of the Corporation. If on such date no such market maker
shall be making a market in the Common Stock, the fair value of the
Common Stock on such date as determined in good faith by the Board of
Directors of the Corporation shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange
on which the Common Stock shall be listed or admitted to trading shall
be open for the transaction of business or, if the Common Stock shall
not be listed or admitted to trading on any national securities
exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which
banking institutions in the State of New York shall not be authorized
or obligated by law or executive order to close.
(b) Notice of any such redemption shall be given by mailing to the holders
of the Series A Junior Participating Preferred Stock a notice of such
redemption, first class postage prepaid, not later than the thirtieth
day and not earlier than the sixtieth-day before the date fixed for
redemption, at their last address as the same shall appear upon the
books of the Corporation. Any notice which shall be mailed in the
manner herein provided shall be conclusively presumed to have been
duly given, whether or not the stockholder shall have received such
notice, and failure duly to give such notice by mail, or any defect in
such notice, to any holder of Series A Junior Participating Preferred
Stock shall not affect the validity of the proceedings for the
redemption of such Series A Junior Participating Preferred Stock.
(c) If less than all the outstanding shares of the Series A Junior
Participating Preferred Stock are to be redeemed by the Corporation,
the number of shares to be redeemed shall be determined by the Board
of Directors and the shares to be redeemed shall be determined by lot
or pro rata or in such fair and equitable other manner as may be
prescribed by resolution of the Board of Directors.
(d) The notice of redemption to each holder of Series A Junior
Participating Preferred Stock shall specify (a) the number of shares
of Series A Junior Participating Preferred Stock of such holder to be
redeemed, (b) the date fixed for redemption, (c) the redemption price
and (d) the place of payment of the redemption price.
(e) If any such notice of redemption shall have been duly given or if the
corporation shall have given to the bank or trust company hereinafter
referred to irrevocable written authorization promptly to give or
complete such notice, and if on or before the redemption date
specified therein the funds necessary for such redemption shall have
been deposited by the Corporation with the bank or trust company
designated in such notice, doing business in the United States of
America and having a capital, surplus and undivided profits
aggregating at least $25,000,000 according to its last published
statement of condition, in trust for the benefit of the holders of
Series A Junior Participating Preferred Stock called for redemption,
then, notwithstanding that any certificate for such shares so called
for redemption shall not have been surrendered for cancellation, from
and after the time of such deposit all such shares called for
redemption shall no longer be deemed outstanding, all rights with
respect to such shares shall no longer be deemed outstanding and all
rights with respect to such shares shall forthwith cease and
terminate, except the right of the holders thereof to receive from
such bank or trust company at any time after the time of such deposit
the funds so deposited, without interest, the right to exercise, up to
the close of business on the fifth day before the date fixed for
redemption, all privileges of conversion or exchange if any. In case
less than all the shares represented by any surrendered certificate
shall be redeemed, a new certificate shall be issued representing the
unredeemed shares. Any interest accrued on such funds so deposited
shall be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of six years from such redemption
date shall be repaid to the Corporation, after which the holders of
shares of Series A Junior Participating Preferred Stock called for
redemption shall look only to the Corporation for payment thereof;
provided, however, that any funds so deposited which shall not be
required for redemption because of the exercise of any privilege of
conversion or exchange subsequent to the date of deposit shall be
repaid to the Corporation forthwith.
9. Ranking.
The Series A Junior Participating Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment
of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
10. Amendment.
The Articles of Incorporation of the Corporation shall not be further
amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of at least a majority of the
outstanding shares of Series A Junior Participating Preferred Stock,
voting separately as a class.
D. The designations, voting powers, preferences and relative, participating,
optional and other special rights of the Series B Convertible Preferred
Stock, and the qualifications, limitations or restrictions thereof are as
follows:
1. Number of Shares and Designations.
Two thousand (2,000) shares of the Preferred Stock, without par value,
of the Corporation are constituted as a series thereof designated as
Series B Convertible Preferred Stock (the "Series B Preferred Stock").
2. Definitions.
For purposes of the Series B Preferred Stock, the following terms shall
have the meanings indicated:
(a) "Accrued Dividends" shall have the meaning set forth in Section 4(a)
below.
(b) "Articles of Incorporation" shall mean the Articles of Incorporation
of the Corporation, as amended from time to time.
(c) "Board of Directors" shall mean the board of directors of the
Corporation or any committee authorized by such board of directors to
perform any of its responsibilities with respect to the Series B
Preferred Stock.
(d) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
(e) "Call Event" shall mean the consummation of a transaction pursuant to
Section 2.2 of the Transaction Agreement.
(f) "Common Stock" shall mean the common stock of the Corporation, without
par value.
(g) "Constituent Person" shall have the meaning set forth in Section 8(e)
below.
(h) "Conversion Price" shall mean the conversion price per share of Common
Stock for which the Series B Preferred Stock is convertible, as such
Conversion Price may be adjusted pursuant to Section 8 below. The
initial conversion price will be $ 50.20.
(i) "Current Market Price" of publicly traded shares of Common Stock or
any other class of capital stock or other security of the Corporation
or any other issuer for any day shall mean the last reported sales
price, regular way on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the New York Stock
Exchange Composite Tape or, if such security is not listed or admitted
for trading on the New York Stock Exchange ("NYSE"), on the principal
national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any
national securities exchange, on the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotations
System ("NASDAQ") or, if such security is not quoted on such National
Market System, the average of the closing bid and asked prices on such
day in the over-the-counter market as reported by NASDAQ or, if bid
and asked prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked prices on
such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Board of
Directors.
(j) "Dividend Payment Date" shall mean the last business day of January,
April, July and October in each year, commencing on the last business
day of January, 1997, provided, however, that if any Dividend Payment
Date falls on any day other than a Business Day, the dividend payment
due on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date.
(k) "Dividend Periods" shall mean quarterly dividend periods commencing on
the last business day of January, April, July and October of each year
and ending on and including the day preceding the first day of the
next succeeding Dividend Period (other than the initial Dividend
Period, which shall commence on the Issue Date and end on and include
January 30, 1997).
(l) "Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Common Stock during the five (5) consecutive
Trading Days selected by the Corporation commencing not more than 20
Trading Days before, and ending not later than, the earlier of the day
in question and the day before the "ex" date with respect to the
issuance or distribution requiring such computation. The term "'ex'
date," when used with respect to any issuance or distribution, means
the first day on which the Common Stock trades regular way, without
the right to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determine that day's
Current Market Price.
(m) "Issue Date" shall mean the first date on which shares of Series B
Preferred Stock are issued and sold.
(n) "Junior Stock" shall mean the Common Stock, the Series A Preferred
Stock and any other class or series of shares of the Corporation over
which the Series B Preferred Stock has preference or priority in the
payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
(o) "Liquidation Preference" shall have the meaning set forth in Section
4(a) below.
(p) "non-electing share" shall have the meaning set forth in Section 8(e)
below.
(q) "Person" shall mean any individual, firm, partnership, corporation or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
(r) "Put Event" shall mean the consummation of a transaction pursuant to
Section 2.3 of the Transaction Agreement.
(s) "Redemption Date" shall have the meaning set forth in Section 5(b)
below.
(t) "Rights" shall mean the rights of the Corporation which are issuable
under the Corporation's Rights Agreement dated as of November 28,
1988, and as amended from time to time, or rights to purchase any
capital stock of the Corporation under any successor shareholder
rights plan or plans adopted in replacement of the Corporation's
Rights Agreement.
(u) "Securities" shall have the meaning set forth in Section 8(d)(3)
below.
(v) "Series A Preferred Stock" shall mean the series of Preferred Stock of
the Corporation, without par value, designated Series A Junior
Participating Preferred Stock.
(w) "Series B Preferred Stock" shall have the meaning set forth in Section
1 above.
(x) "set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other
distribution by the Board of Directors, the allocation of funds to be
so paid on any series or class of capital stock of the Corporation;
provided, however, that if any funds for any class or series of Junior
Stock or any class or series of stock ranking on a parity with the
Series B Preferred Stock as to the payment of dividends are placed in
a separate account of the Corporation or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with
respect to the Series B Preferred Stock shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying
or other similar agent.
(y) "Stated Value" shall have the meaning set forth in Section 4(a) below.
(z) "Trading Day" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities
exchange on which such securities are listed or admitted, or if not
listed or admitted for trading on any national securities exchange, on
the National Market System of the NASDAQ, or if such securities are
not quoted on such National Market System, in the applicable
securities market in which the securities are traded.
(aa) "Transaction" shall have the meaning set forth in Section D.8(e)
hereof.
(bb) "Transaction Agreement" shall mean that certain Transaction Agreement,
dated as of December 30, 1994, by and among the Corporation and
General Reinsurance Corporation.
(cc) "Transfer Agent" means The First National Bank of Boston or such other
agent or agents of the Corporation as may be designated by the Board
of Directors as the transfer agent for the Series B Preferred Stock.
3. Dividends.
(a) The holders of shares of the Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors out of assets legally available for that purpose, dividends
payable in cash at the rate per annum of $650 per share of Series B
Preferred Stock. Such dividends shall be cumulative from the Issue
Date, whether or not in any Dividend Period or Periods there shall be
assets of the Corporation legally available for the payment of such
dividends, and shall be payable quarterly, when, as and if declared by
the Board of Directors, in arrears on Dividend Payment Dates,
commencing on January 31, 1997. Each such dividend shall be payable in
arrears to the holders of record of shares of the Series B Preferred
Stock, as they appear on the stock records of the Corporation at the
close of business on such record dates, which shall not be more than
60 days nor less than 10 days preceding the payment dates thereof, as
shall be fixed by the Board of Directors or a duly authorized
committee thereof. Accrued and unpaid dividends for any past Dividend
Periods may be declared and paid at any time, without reference to any
Dividend Payment Date, to holders of record on such date, not
exceeding 45 days preceding the payment date thereof, as may be fixed
by the Board of Directors.
(b) The amount of dividends payable for each full Dividend Period for the
Series B Preferred Stock shall be computed by dividing the annual
dividend rate by four. The amount of dividends payable for the initial
Dividend Period, or any other period shorter or longer than a full
Dividend Period, on the Series B Preferred Stock shall be computed on
the basis of twelve 30-day months and a 360-day year. Holders of
shares of Series B Preferred Stock shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of
cumulative dividends, as herein provided, on the Series B Preferred
Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series B
Preferred Stock that may be in arrears.
(c) So long as any shares of the Series B Preferred Stock are outstanding,
no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on any class or
series of stock of the Corporation ranking, as to dividends and
amounts distributable upon liquidation, dissolution or winding up, on
a parity with the Series B Preferred Stock, for any period unless full
cumulative dividends have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series B Preferred Stock for all
Dividend Periods terminating on or prior to the date of payment of the
dividend on such class or series of parity stock. When dividends are
not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon shares of the Series
B Preferred Stock and all dividends declared upon any other class or
series of stock ranking on a parity as to dividends and amount
distributable upon liquidation, dissolution or winding up shall be
declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series B Preferred Stock and accumulated
and unpaid on such parity stock.
(d) So long as any shares of the Series B Preferred Stock are outstanding,
no dividends (other than (i) the Rights and (ii) dividends or
distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Stock) shall be declared
or paid or set apart for payment or other distribution declared or
made upon Junior Stock, nor shall any Junior Stock or any series of
stock of the Corporation ranking, as to dividends and amounts
distributable upon liquidation, dissolution or winding up, on a parity
with Series B Preferred Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of
shares of Common Stock made for purposes of an employee incentive or
benefit plan of the Corporation or any subsidiary) for any
consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by
the Corporation, directly or indirectly (except by conversion into or
exchange for Junior Stock), unless in each case the full cumulative
dividends on all outstanding shares of the Series B Preferred Stock
and any other stock of the Corporation ranking on a parity with the
Series B Preferred Stock, as to dividends and amounts distributable
upon liquidation, dissolution or winding up shall have been paid or
set apart for payment for all past Dividend Periods with respect to
the Series B Preferred Stock and all past dividend periods with
respect to such parity stock.
4. Payments upon Liquidation.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart
for the holders of Junior Stock, the holders of the shares of Series B
Preferred Stock shall be entitled to receive Ten Thousand Dollars
($10,000) per share of Series B Preferred Stock (the "Stated Value")
plus an amount equal to all dividends (whether or not earned or
declared) accrued and unpaid thereon ("Accrued Dividends") to the date
of final distribution to such holders (the "Liquidation Preference");
but such holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation,
the assets of the Corporation, or proceeds thereof, distributable
among the holders of the shares of Series B Preferred Stock shall be
insufficient to pay in full the Liquidation Preference, and the
liquidation preference on all other shares of any class or series of
stock ranking, as to dividends and amounts distributable upon
liquidation, dissolution or winding up, on a parity with the Series B
Preferred Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of shares of Series B Preferred Stock
and any such other parity stock ratably in accordance with the
respective amounts that would be payable on such shares of Series B
Preferred Stock and any such other stock if all amounts payable
thereon were paid in full. For the purposes of this Section 4, (i) a
consolidation or merger of the Corporation with one or more
corporations, or (ii) a sale or transfer of all or substantially all
of the Corporation's assets, shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the
Corporation.
(b) Subject to the rights of the holders of shares of any series or class
or classes of stock ranking on a parity with or prior to the Series B
Preferred Stock as to dividends and amounts distributable upon
liquidation, dissolution or winding up of the Corporation, after
payment shall have been made to the holders of the Series B Preferred
Stock, as and to the fullest extent provided in this Section 4, any
other series or class or classes of Junior Stock shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled
to receive any and all assets remaining to be paid or distributed, and
the holders of the Series B Preferred Stock shall not be entitled to
share therein.
5. Redemption at the Option of the Corporation.
(a) The shares of Series B Preferred Stock shall be redeemable at the
option of the Corporation by resolution of its Board of Directors, in
whole (i) at any time on or after the fifth anniversary of the Issue
Date or (ii) if on the date of a notice pursuant to Section 5(b)
below, the Current Market Price of all Common Stock which would be
issuable upon conversion of all of the 2,000 shares of Preferred Stock
originally issued, as of any date within ten Business Days prior to
such notice date, exceeded $22 million. In either case, such
redemption shall be at the Stated Value, plus all dividends accrued
and unpaid on the shares of Series B Preferred Stock up to the date
fixed for the redemption, upon giving notice as provided hereinbelow.
(b) At least 90 days prior to the date fixed for the redemption of shares
of Series B Preferred Stock, a written notice shall be mailed in a
postage prepaid envelope to each holder of record of the shares of
Series B Preferred Stock to be redeemed, addressed to such holder at
his post office address as shown on the records of the Corporation,
notifying such holder of the election of the corporation to redeem
such shares, stating the date fixed for redemption thereof (the
"Redemption Date"), and calling upon such holder to surrender to the
Corporation, on the Redemption Date at the place designated in such
notice, his certificate or certificates representing the number of
shares specified in such notice of redemption.
On or after the Redemption Date, each holder of shares of Series B
Preferred Stock to be redeemed shall present and surrender his
certificate or certificates for such shares to the Corporation at the
place designated in such notice and thereupon the redemption price of
such shares shall be paid to or on the order of the person whose name
appears on such certificate or certificates as the owner thereof and
each surrendered certificate shall be canceled. In case less than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
From and after the Redemption Date (unless default shall be made by
the Corporation in payment of the redemption price), all dividends on
the shares of Series B Preferred Stock designated for redemption in
such notice shall cease to accrue, and all rights of the holders
thereof as stockholders of the Corporation, except the right to
receive the redemption price of such shares (including all accrued and
unpaid dividends up to the Redemption Date) upon the surrender of
certificates representing the same, shall cease and terminate and such
shares shall not thereafter be transferred (except with the consent of
the Corporation) on the books of the Corporation, and such shares
shall not be deemed to be outstanding for any purpose whatsoever. At
its election, the Corporation, prior to the Redemption Date, may
deposit the redemption price (including all accrued and unpaid
dividends up to the Redemption Date) of shares of Series B Preferred
Stock so called for redemption in trust for the holders thereof with a
bank or trust company (having a capital surplus and undivided profits
aggregating not less than $50,000,000) in the Borough of Manhattan,
City and State of New York, or in any other city in which the
Corporation at the time shall maintain a transfer agency with respect
to such shares, in which case the aforesaid notice to holders of
shares of Series B Preferred Stock to be redeemed shall state the date
of such deposit, shall specify the office of such bank or trust
company as the place of payment of the redemption price, and shall
call upon such holders to surrender the certificates representing such
shares at such place on or after the date fixed in such redemption
notice (which shall not be later than the Redemption Date) against
payment of the redemption price (including all accrued and unpaid
dividends up to the Redemption Date). Any interest accrued on such
funds shall be paid to the Corporation from time to time. Any moneys
so deposited which shall remain unclaimed by the holders of such
shares of Series B Preferred Stock at the end of two years after the
Redemption Date shall be returned by such bank or trust company to the
Corporation.
If a notice of redemption has been given pursuant to this Section 5
and any holder of shares of Series B Preferred Stock shall, prior to
the close of business on the day preceding the Redemption Date, give
written notice to the Corporation pursuant to Section 8 below of the
conversion of any or all of the shares to be redeemed held by such
holder (accompanied by a certificate or certificates for such shares,
duly endorsed or assigned to the Corporation, and any necessary
transfer tax payment, as required by Section 8 below), then such
redemption shall not become effective as to such shares to be
converted, such conversion shall become effective as provided in
Section 8 below, and any moneys set aside by the Corporation for the
redemption of such shares of converted Series B Preferred Stock shall
revert to the general funds of the Corporation.
6. Redemption at the Option of the Holder.
The Corporation, when requested to do so in writing by a holder of
Series B Preferred Stock at any time after the earlier of (i) the
eighth anniversary of an Issue Date pursuant to a Call Event or (ii)
the fifth anniversary of an Issue Date pursuant to a Put Event, shall
purchase or redeem the share or shares of Series B Preferred Stock
identified by such holder, such purchase or redemption to occur on a
date not more than thirty days after receipt by the Corporation of such
request, at the Stated Value of the share or shares to be purchased or
redeemed, plus all dividends accrued and unpaid on such share or shares
up to the date of such purchase or redemption.
7. Shares to Be Retired.
All shares of Series B Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation shall be restored to the
status of authorized but unissued shares of Preferred Stock, without
designation as to series.
8. Conversion.
Holders of shares of Series B Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as
follows:
(a) Subject to and upon compliance with the provisions of this Section 8,
a holder of shares of Series B Preferred Stock shall have the right,
at its option, at any time after 5 Business Days after the Issue Date,
to convert such shares into the number of fully paid and nonassessable
shares of Common Stock obtained by dividing the aggregate Stated Value
of such shares by the Conversion Price (as in effect on the date
provided for in the last paragraph of Section 8(b)) by surrendering
such shares to be converted, such surrender to be made in the manner
provided in Section 8(b); provided, however, that the right to convert
shares called for redemption pursuant to Section D.5 of this article
shall terminate at the close of business on the day preceding the
Redemption Date, unless the Corporation shall default in making
payment of the cash payable upon such redemption under Section D.5 of
this article. Certificates will be issued for the remaining shares of
Series B Preferred Stock in any case in which fewer than all of the
shares of Series B Preferred Stock represented by a certificate are
converted.
(b) In order to exercise the conversion right, the holder of shares of
Series B Preferred Stock to be converted shall surrender the
certificate or certificates representing such shares, duly endorsed or
assigned to the Corporation or in blank, at the office of the Transfer
Agent in the Borough of Manhattan, City of New York, accompanied by
written notice to the Corporation that the holder thereof elects to
convert Series B Preferred Stock. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such
share of Series B Preferred Stock is registered, each share
surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by
the holder or such holder's duly authorized attorney and an amount
sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have
been paid).
Holders of shares of Series B Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment
Date notwithstanding the conversion thereof following such dividend
payment record date and prior to such Dividend Payment Date. Except as
provided above, the Corporation shall make no payment or allowance for
unpaid dividends, whether or not in arrears, on converted shares or
for dividends on the shares of Common Stock issued upon such
conversion.
As promptly as practicable after the surrender of certificates for
shares of Series B Preferred Stock as aforesaid, the Corporation shall
issue and shall deliver at such office to such holder, or on his or
her written order, a certificate or certificates for the number of
full shares of Common Stock issuable upon the conversion of such
shares in accordance with provisions of this Section 8, and any
fractional interest in respect of a share of Common Stock arising upon
such conversion shall be settled as provided in Section 8(c).
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates
for shares of Series B Preferred Stock shall have been surrendered and
such notice (and if applicable, payment of an amount equal to the
dividend payable on such shares) received by the Corporation as
aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby at such
time on such date and such conversion shall be at the Conversion Price
in effect at such time on such date, unless the stock transfer books
of the Corporation shall be closed on that date, in which event such
person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day
on which such stock transfer books are open, but such conversion shall
be at the Conversion Price in effect on the date upon which such
shares shall have been surrendered and such notice received by the
Corporation.
(c) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of the Series B Preferred
Stock. Instead of any fractional interest in a share of Common Stock
that would otherwise be deliverable upon the conversion of a share of
Series B Preferred Stock, the Corporation shall pay to the holder of
such share an amount in cash based upon the Current Market Price of
Common Stock on the Trading Day immediately preceding the date of
conversion. If more than one share shall be surrendered for conversion
at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis
of the aggregate number of shares of Series B Preferred Stock so
surrendered.
(d) The Conversion Price shall be adjusted from time to time as follows:
(1) If the Corporation shall after the Issue Date (A) pay a
dividend or make a distribution on its capital stock in
shares of its Common Stock, (B) subdivide its outstanding
Common Stock into a greater number of shares, (C) combine
its outstanding Common Stock into a smaller number of shares
or (D) issue any shares of capital stock by reclassification
of its Common Stock, the Conversion Price in effect at the
opening of business on the day next following the date fixed
for the determination of stockholders entitled to receive
such dividend or distribution or at the opening of business
on the day next following the day on which such subdivision,
combination or reclassification becomes effective, as the
case may be, shall be adjusted so that the holder of any
share of Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares
of Common Stock that such holder would have owned or have
been entitled to receive after the happening of any of the
events described above had such share been converted
immediately prior to the record date in the case of a
dividend or distribution or the effective date in the case
of a subdivision, combination or reclassification. An
adjustment made pursuant to this subparagraph (a) shall
become effective immediately after the opening of business
on the day next following the record date (except as
provided in Section 8(h) below) in the case of a dividend or
distribution and shall become effective immediately after
the opening of business on the day next following the
effective date in the case of a subdivision, combination or
reclassification.
(2) If the Corporation shall issue after the Issue Date rights
or warrants (in each case, other than the Rights) to all
holders of Common Stock entitling them (for a period
expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Common Stock at a price
per share less than the Fair Market Value per share of
Common Stock on the record date for the determination of
stockholders entitled to receive such rights or warrants,
then the Conversion Price in effect at the opening of
business on the day next following such record date shall be
adjusted to equal the price determined by multiplying (I)
the Conversion Price in effect immediately prior to the
opening of business on the day next following the date fixed
for such determination by (II) a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common
Stock outstanding on the close of business on the date fixed
for such determination and (B) the number of shares that the
aggregate proceeds to the Corporation from the exercise of
such rights or warrants for Common Stock would purchase at
such Fair Market Value, and the denominator of which shall
be the sum of (A) the number of shares of Common Stock
outstanding on the close of business on the date fixed for
such determination and (B) the number of additional shares
of Common Stock offered for subscription or purchase
pursuant to such rights or warrants. Such adjustment shall
become effective immediately after the opening of business
on the day next following such record date (except as
provided in Section 8(h) below). In determining whether any
rights or warrants entitle the holders of Common Stock to
subscribe for or purchase shares of Common Stock at less
than such Fair Market Value, there shall be taken into
account any consideration received by the Corporation upon
issuance and upon exercise of such rights or warrants, the
value of such consideration, if other than cash, to be
determined by the Board of Directors.
(3) If the Corporation shall distribute to all holders of its
Common Stock any shares of capital stock of the Corporation
(other than Common Stock) or evidence of its indebtedness or
assets (excluding cash dividends or distributions paid from
profits or surplus of the Corporation) or rights or warrants
(in each case, other than the Rights) to subscribe for or
purchase any of its securities (excluding those rights and
warrants issued to all holders of Common Stock entitling
them for a period expiring within 45 days after the record
date referred to in subparagraph (b) above to subscribe for
or purchase Common Stock, which rights and warrants are
referred to in and treated under subparagraph (b) above (any
of the foregoing being hereinafter in this subparagraph (3)
called the "Securities"), then in each such case the
Conversion Price shall be adjusted so that it shall equal
the price determined by multiplying (I) the Conversion Price
in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to
receive such distribution by (II) a fraction, the numerator
of which shall be the Fair Market Value per share of the
Common Stock on the record date mentioned below less the
then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of the
portion of the capital stock or assets or evidences of
indebtedness so distributed or of such rights or warrants
applicable to one share of Common Stock, and the denominator
of which shall be the Fair Market Value per share of the
Common Stock on the record date mentioned below. Such
adjustment shall become effective immediately at the opening
of business on the Business Day next following (except as
provided in Section 8(h) below) the record date for the
determination of shareholders entitled to receive such
distribution. For the purposes of this clause (c), the
distribution of a Security, which is distributed not only to
the holders of the Common Stock on the date fixed for the
determination of stockholders entitled to such distribution
of such security, but also is distributed with each share of
Common Stock delivered to a person converting a share of
Series B Preferred Stock after such determination date,
shall not require an adjustment of the Conversion Price
pursuant to this clause (c); provided that on the date, if
any, on which a Person converting a share of Series B
Preferred Stock would no longer be entitled to receive such
Security with a share of Common Stock (other than as a
result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have
occurred and the Conversion Price shall be adjusted as
provided in this clause (c) (and such day shall be deemed to
be "the date fixed for the determination of the stockholders
entitled to receive such distribution" and "the record date"
within the meaning of the two preceding sentences).
(4) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase
or decrease of at least 1% in such price; provided, however,
that any adjustments that by reason of this subparagraph (4)
are not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made;
and provided, further, that any adjustment shall be required
and made in accordance with the provisions of this Section 8
(other than this subparagraph (4)) not later than such time
as may be required in order to preserve the tax-free nature
of a distribution to the holders of shares of Common Stock.
Notwithstanding any other provisions of this Section 8, the
Corporation shall not be required to make any adjustment of
the Conversion Price for the issuance of any shares of
Common Stock pursuant to any plan providing for the
reinvestment of dividends on securities of the Corporation.
All calculations under this Section 8 shall be made to the
nearest cent (with $.005 being rounded upward) or to the
nearest 1/10 of a share (with .05 of a share being rounded
upward), as the case may be. Anything in this Section 8(d)
to the contrary notwithstanding, the Corporation shall be
entitled, to the extent permitted by law, to make such
reductions in the Conversion Price, in addition to those
required by this Section 8(d), as it in its discretion shall
determine to be advisable in order that any stock dividends,
subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase stock
or securities, or a distribution of other assets (other than
cash dividends) hereafter made by the Corporation to its
stockholders shall not be taxable.
(e) If the Corporation shall be a party to any transaction (including
without limitation a merger, consolidation, sale of all or
substantially all of the Corporation's assets or recapitalization of
the Common Stock and excluding any transaction as to which Section
8(d)(1) applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Common
Stock shall be converted into the right to receive stock, securities
or other property (including cash or any combination thereof), each
share of Series B Preferred Stock which is not converted into the
right to receive stock, securities or other property in connection
with such Transaction shall thereafter be convertible into the kind
and amount of shares of stock, securities and other property
(including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of shares
or fraction thereof of Common Stock into which one share of Series B
Preferred Stock was convertible immediately prior to such Transaction,
assuming such holder of Common Stock (i) is not a Person with which
the Corporation consolidated or into which the Corporation merged or
which merged into the Corporation or to which such sale or transfer
was made, as the case may be ("Constituent Person"), or an affiliate
of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of stock, securities and
other property (including cash) receivable upon such Transaction
(provided that if the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction is not the
same for each share of Common Stock of the Corporation held
immediately prior to such Transaction by other than a Constituent
Person or an affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing share"), then
for the purpose of this Section 8(e) the kind and amount of stock,
securities and other property (including cash) receivable upon such
Transaction by each non-electing share shall be deemed to be the kind
and amount so receivable per share by the plurality of the
non-electing shares). The Corporation shall not be a party to any
Transaction unless the terms of such Transaction are consistent with
the provisions of this Section 8(e) and it shall not consent or agree
to the occurrence of any Transaction until the Corporation has entered
into an agreement with the successor or purchasing entity, as the case
may be, for the benefit of the holders of the Series B Preferred Stock
that will contain provisions enabling the holders of the Series B
Preferred Stock that remains outstanding after such Transaction to
convert into the consideration received by holders of Common Stock at
the Conversion Price in effect immediately prior to such Transaction.
The provisions of this Section 8(e) shall similarly apply to
successive Transactions.
(f) If:
(1) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock (other than in cash out
of profits or surplus and other than the Rights); or
(2) the Corporation shall authorize the granting to the
holders of the Common Stock of rights or warrants (other
than the Rights) to subscribe for or purchase any shares
of any class or any other rights or warrants (other than
the Rights); or
(3) there shall be any reclassification of the Common Stock
(other than an event to which Section 8(d)(1) applies) or
any consolidation or merger to which the Corporation is a
party and for which approval of any stockholders of the
Corporation is required, or the sale or transfer of all or
substantially all of the assets of the Corporation as an
entirety; or
(4) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
then the Corporation shall cause to be filed with the
Transfer Agent and shall cause to be mailed to the holders
of shares of the Series B Preferred Stock at their
addresses as shown on the stock records of the
Corporation, as promptly as possible, but at least 15 days
prior to the applicable date hereinafter specified, a
notice stating (A) the date on which a record is to be
taken for the purpose of such dividend, distribution or
rights or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution or rights or
warrants are to be determined or (B) the date on which
such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is
expected to become effective, and the date as of which it
is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for
securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up. Failure
to give or receive such notice or any defect therein shall
not affect the legality or validity of the proceedings
described in this Section 8.
(g) Whenever the Conversion Price is adjusted as herein provided,
the Corporation shall promptly file with the Transfer Agent an
officer's certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the
facts requiring such adjustment which certificate shall be
prima facie evidence of the correctness of such adjustment.
Promptly after delivery of such certificate, the Corporation
shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the
effective date of such adjustment and shall mail such notice of
such adjustment of the Conversion Price to the holder of each
share of Series B Preferred Stock at such holder's last address
as shown on the stock records of the Corporation.
(h) In any case in which Section 8(d) provides that an adjustment
shall become effective on the day next following a record date
for an event, the Corporation may defer until the occurrence of
such event (A) issuing to the holder of any share of Series B
Preferred Stock converted after such record date and before the
occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable
upon such conversion before giving effect to such adjustment
and (B) paying to such holder any amount in cash in lieu of any
fraction pursuant to Section 8(c).
(i) For purposes of this Section 8, the number of shares of Common
Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the
Corporation.
(j) There shall be no adjustment of the Conversion Price in case of
the issuance of any stock of the Corporation in a
reorganization, acquisition or other similar transaction except
as specifically set forth in this Section 8. If any action or
transaction would require adjustment of the Conversion Price
pursuant to more than one paragraph of this Section 8, only one
adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value.
(k) If the Corporation shall take any action affecting the Common
Stock, other than action described in this Section 8, that in
the opinion of the Board of Directors would materially
adversely affect the conversion rights of the holders of the
shares of Series B Preferred Stock, the Conversion Price for
the Series B Preferred Stock may be adjusted, to the extent
permitted by law, in such manner, if any, and at such time, as
the Board of Directors may determine to be equitable in the
circumstances.
(l) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued shares of Common Stock
for the purpose of effecting conversion of the Series B
Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of
Series B Preferred Stock not theretofore converted. For
purposes of this Section 8.(l)., the number of shares of Common
Stock that shall be deliverable upon the conversion of all
outstanding shares of Series B Preferred Stock shall be
computed as if at the time of computation all such outstanding
shares were held by a single holder.
The Corporation covenants that any shares of Common Stock
issued upon conversion of the Series B Preferred Stock shall be
validly issued, fully paid and non-assessable. Before taking
any action that would cause an adjustment reducing the
Conversion Price below the then-par value of the shares of
Common Stock deliverable upon conversion of the Series B
Preferred Stock, the Corporation will take any corporate action
that, in the opinion of its counsel, may be necessary in order
that the Corporation may validly and legally issue fully-paid
and nonassessable shares of Common Stock at such adjusted
Conversion Price.
(m) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue
or delivery of shares of Common Stock or other securities or
property on conversion of the Series B Preferred Stock pursuant
hereto; provided, however, that the Corporation shall not be
required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Common
Stock or other securities or property in a name other than that
of the holder of the Series B Preferred Stock to be converted
and no such issue or delivery shall be made unless and until
the person requesting any issue or delivery has paid to the
Corporation the amount of any such tax or established, to the
reasonable satisfaction of the Corporation, that such tax has
been paid.
9. Ranking.
Any class or series of stock of the Corporation shall be deemed to
rank:
(a) prior to the Series B Preferred Stock, as to the payment of
dividends and as to distributions of assets upon liquidation,
dissolution or winding up, if the holders of such class or series
shall be entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up in
preference or priority to the holders of Series B Preferred
Stock;
(b) on a parity with the Series B Preferred Stock, as to the payment
of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per
share thereof be different from those of the Series B Preferred
Stock if the holders of such class of stock or series and the
Series B Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective
amounts of accrued and unpaid dividends per share or liquidation
preferences, without preference or priority one over the other;
and
(c) junior to the Series B Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, if such stock or series shall be
Common Stock or Series A Preferred Stock or if the holders of
Series B Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon liquidation,
dissolution or winding up in preference or priority to the
holders of shares of such stock or series.
10. Voting.
(a) The holders of shares of Series B Preferred Stock shall have the
following voting rights:
1. Subject to the provision for adjustment hereinafter set
forth, each share of Series B Preferred Stock shall entitle
the holder thereof to 199 votes on all matters submitted to
a vote of the shareholders of the Corporation. In the event
the Corporation shall at any time after the Issue Date (i)
declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of votes
per share to which holders of shares of Series B Preferred
Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
2. Except as otherwise provided herein or by law, the holders
of shares of Series B Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on
all matters submitted to a vote of shareholders of the
Corporation.
(b) Unless the affirmative vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of the
holders of at least 66 2/3% of all of the outstanding shares of Series
B Preferred Stock (in addition to any vote required by the terms of
any other affected series of Preferred Stock ranking on a parity with
the Series B Preferred Stock as to dividends and amounts distributable
upon liquidation, dissolution and winding up), given in person or by
proxy, either in writing or by a vote at a meeting called for the
purpose, at which the holders of shares of Series B Preferred Stock
and such other series of Preferred Stock shall vote together as a
single class without regard to series, shall be necessary for
authorizing, effecting or validating the amendment, alteration or
repeal of any of the provisions of the Articles of Incorporation or of
any certificate amendatory thereof or supplemental thereto (including
any Certificate of Designations, Preferences and Rights or any similar
document relating to any series of Preferred Stock) which would
materially adversely affect the preferences, rights, powers or
privileges of the Series B Preferred Stock; provided, however, that
the amendment of the provisions of the Articles of Incorporation so as
to authorize or create, or to increase the authorized amount of, any
Junior Stock or any shares of any class ranking on a parity with the
Series B Preferred Stock shall not be deemed to materially adversely
affect the preferences, rights, powers or privileges of Series B
Preferred Stock.
(c) Unless the affirmative vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of the
holders of at least 66 2/3% of all of the outstanding shares of Series
B Preferred Stock (in addition to any vote required by the terms of
any other series of Preferred Stock ranking on a parity with the
Series B Preferred Stock as to dividends and amounts distributable
upon liquidation, dissolution or winding up), given in person or by
proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of Series B Preferred Stock and
such other series of Preferred Stock shall vote together as a single
class without regard to series, shall be necessary for authorizing,
effecting or validating the creation, authorization or issue of any
shares of any class of stock of the Corporation ranking prior to the
Series B Preferred Stock as to dividends or upon liquidation,
dissolution or winding up, or the reclassification of any authorized
stock of the Corporation into any such prior shares, or the creation,
authorization or issuance of any obligation or security convertible
into or evidencing the right to purchase any such prior shares.
(d) For purposes of the provisions of Sections 10(b) and 10(c), each share
of Series B Preferred Stock shall have one (1) vote per share.
(e) Except as set forth herein, holders of Series B Preferred Stock shall
have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
11. Record Holders.
The Corporation and the Transfer Agent may deem and treat the record
holder of any shares of Series B Preferred Stock as the true and
lawful owner thereof for all purposes, and neither the Corporation nor
the Transfer Agent shall be affected by any notice to the contrary.
Article V
The corporate office shall be in Hartford or in such other town in Connecticut
as the Board of Directors may determine. The annual meeting of the shareholders
shall be held at such time and place within the state and upon such notice as
may be determined from time to time either by or in accordance with the bylaws.
At all meetings of the shareholders and subject, in the case of preferred
shareholders, to such provisions concerning voting rights as the Board of
Directors may determine pursuant to the authority granted in Article III hereof,
each shareholder shall be entitled to vote in person or by an attorney duly
authorized by a written proxy and each share of common stock represented at such
meetings shall be entitled to one vote.
Article VI
The business property and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of the number of
directors fixed from time to time by resolution adopted by the affirmative vote
of a majority of the entire Board of Directors. The directors shall be divided
into three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. The directors initially
elected to Class I shall serve for a term expiring at the annual meeting of
shareholders next following the end of the calendar year 1997, the directors
initially elected to Class II shall serve for a term expiring at the annual
meeting of shareholders next following the end of the calendar year 1998 and the
directors initially elected to the third class shall serve for a term expiring
at the annual meeting of shareholders next following the end of the calendar
year 1998. At each annual meeting of shareholders, successors to the class of
directors whose term expires at the annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case will a reduction of the number of directors remove any
director in office or shorten the term of any incumbent director. A director
shall hold office until the annual meeting for the year in which his term
expires and until his successor shall be elected and shall qualify, subject,
however, to prior death, resignation, removal from office or order of court
that, by reason of incompetency or any other lawful cause, he is no longer a
director in office.
Any vacancy on the Board of Directors that results from an increase in the
number of directors may be filled by the concurring vote of directors holding a
majority of the directorships, which number of directorships shall be the number
prior to the vote on the increase, and any other vacancy occurring in the Board
of Directors may be filled by concurring vote of a majority of the remaining
directors then in office, although less than a quorum, or by a sole remaining
director. Any director elected to fill a vacancy not resulting from an increase
in the number of directors shall have the same remaining term as that of his
predecessor.
Any director or the entire Board of Directors may be removed only for cause by
the affirmative vote of eighty percent (80%) of the votes entitled to be cast by
the holders of all then outstanding shares of voting stock of the Corporation,
voting together as a single class. For the purposes of this Article VI, "cause"
shall be defined as (a) a final non-appealable order of conviction of a felony
involving moral turpitude by a court of competent jurisdiction in the United
States or (b) a final non-appealable order of a court of competent jurisdiction
in the United States finding gross negligence in the performance of duties as a
director or officer of the Corporation.
Notwithstanding the foregoing, whenever the holders of any one or more classes
or series of preferred stock issued by the Corporation shall have the right,
voting separately by class or series, to elect directors at an annual or special
meeting of shareholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms of these
Articles applicable thereto, and such directors so elected shall not be divided
into classes pursuant to this Article VI unless expressly provided by such term.
Notwithstanding any other provisions of these Articles or the bylaws of the
Corporation (and notwithstanding the fact that a lesser percentage or separate
class vote may be specified by law, these Articles or the bylaws of the
Corporation) the affirmative vote of the holders of not less than eighty percent
(80%) of the votes entitled to be cast by the holders of all then outstanding
shares of voting stock of the Corporation, voting together as a single class,
shall be required to amend or repeal, or adopt any provisions inconsistent with
this Article VI; provided, however, that this paragraph shall not apply to, and
such eighty percent (80%) vote shall not be required for any amendment, repeal
or adoption recommended by three-quarters of the entire Board if all of such
directors are persons who were members of the Board at the annual meeting of
shareholders of the Corporation held prior to the proposal of any such
amendment, repeal or adoption or persons nominated by such members.
Article VII
A. In addition to any affirmative vote required by law or these Articles or
the bylaws of the Corporation, and except as otherwise expressly provided
in Section B of this Article VII, a Business Combination (as hereinafter
defined) shall require the affirmative vote of not less than eighty percent
(80%) of the votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock (as hereinafter defined), voting
together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage or separate class vote may be specified, by law or in any
agreement with any national securities exchange or otherwise.
B. The provisions of Section A of this Article VII shall not be applicable to
any particular Business Combination, and such Business Combination shall
require only such affirmative vote, if any, as is required by law or by any
other provision of these Articles or the bylaws of the Corporation, or any
agreement with any national securities exchange, if all of the conditions
specified in either of the following Paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by two-thirds (whether
such approval is made prior to or subsequent to the acquisition of
beneficial ownership of the Voting Stock that caused the Interested
Shareholder, as hereinafter defined to become an Interested Shareholder)
of the Continuing Directors, as hereinafter defined.
2. All of the following conditions shall have been met:
(a) The aggregate amount of cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination shall be at least equal to the highest amount
determined under clauses (i), (ii), (iii) and (iv) below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by or on behalf of the Interested Shareholder for
any share of Common Stock in connection with the acquisition by
the Interested Shareholder of beneficial ownership of shares of
Common Stock within the two-year period immediately prior to
the first public announcement of the proposed Business
Combination (the "Announcement Date");
(ii)the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (the
"Determination Date"), whichever is higher;
(iii)(if applicable) the price per share equal to the Fair Market
Value per share of Common Stock determined pursuant to the
immediately preceding clause (ii), multiplied by the ratio of
(x) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Shareholder for any share of
Common Stock in connection with the acquisition by the
Interested Shareholder of beneficial ownership of shares of
Common Stock within the two-year period immediately prior to
the Announcement Date to (y) the Fair Market Value per share
of Common Stock on the first day in such two-year period on
which the Interested Shareholder acquired beneficial ownership
of any share of Common Stock; and
(iv) The Corporation's net income per share of Common Stock for the
four full consecutive fiscal quarters immediately preceding
the Announcement Date, multiplied by the higher of the then
price/earnings multiple (if any) with respect to common stock
of such Interested Shareholder or the highest price/earnings
multiple with respect to Common Stock within the two-year
period immediately preceding the Announcement Date (such
price/earnings multiples being determined as customarily
computed and reported in the financial community);
(b) The aggregate amount of cash and the Fair Market Value as of the
date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders
of shares of any class or series of outstanding Capital Stock (as
hereinafter defined), other than Common Stock, shall be at least
equal to the highest amount determined under clauses (i), (ii),
(iii) and (iv) below:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by or on behalf of the Interested Shareholder for
any share of such class or series of Capital Stock in
connection with the acquisition by the Interested Shareholder
of beneficial ownership of shares of such class or series of
Capital Stock within the two-year period immediately prior to
the Announcement Date;
(ii) the Fair Market Value per share of such class or series of
Capital Stock on the Announcement Date or on the Determination
Date, whichever is higher;
(iii) (if applicable) the price per share equal to the Fair Market
Value per share of such class or series of Capital Stock
determined pursuant to the immediately preceding clause (ii),
multiplied by the ratio of (x) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the Interested
Shareholder for any share of such class or series of the Capital
Stock in connection with the acquisition by the Interested
Shareholder of beneficial ownership of shares of such class or
series of Capital Stock within the two-year period immediately
prior to the Announcement Date to (y) the Fair Market Value per
share of such class or series of Capital Stock on the first day
in such two-year period on which the Interested Shareholder
acquired beneficial ownership of any share of such class or
series of Capital Stock; and
(iv) (if applicable) the highest preferential amount per share to
which the holders of shares of such class or series of Capital
Stock would be entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, regardless of whether the Business
Combination to be consummated constitutes such an event.
The provision of this paragraph 2(b) shall be required to be met with
respect to every class or series of outstanding Capital Stock,
whether or not the Interested Shareholder has previously acquired
beneficial ownership of any shares of a particular class or series of
Capital Stock.
(c) The consideration to be received by holders of a particular class or
series of outstanding Capital Stock shall be in cash or in the same
form as previously has been paid by or on behalf of the Interested
Shareholder in connection with its direct or indirect acquisition of
beneficial ownership of shares of such class or series of Capital
Stock. If the consideration so paid for shares of any class or series
of Capital Stock varied as to form, the form of consideration for such
class or series of Capital Stock shall be either cash or the form used
to acquire beneficial ownership of the largest number of shares of
such class or series of Capital Stock previously acquired by the
Interested Shareholder.
(d) After such Interested Shareholder has become an Interested Shareholder
and prior to the consummation of such Business Combination: (i) except
as approved by two-thirds of the Continuing Directors, there shall
have been no failure to declare and pay at the regular date therefor
any full quarterly dividends (whether or not cumulative) payable in
accordance with the terms of any outstanding Capital Stock; (ii) there
shall have been no reduction in the annual rate of dividends paid on
the Common Stock (except as necessary to reflect any stock split,
stock dividend or subdivision of the Common Stock), except as approved
by two-thirds of the Continuing Directors; (iii) there shall have been
an increase in the annual rate of dividends paid on the Common Stock
as necessary to reflect fully any reclassification (including any
reverse stock split), recapitalization, reorganization or any similar
transaction that has the effect of reducing the number of outstanding
shares of Common Stock, unless the failure so to increase such annual
rate is approved by two-thirds of the Continuing Directors; and (iv)
such Interested Shareholder shall not have become the beneficial owner
of any additional shares of Capital Stock except as part of the
transaction that results in such Interested Shareholder becoming an
Interested Shareholder and except in a transaction that, after giving
effect thereto, would not result in any increase in the Interested
Shareholder's percentage beneficial ownership of any class or series
of Capital Stock.
(e) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a
shareholder of this Corporation), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantages provided by this Corporation, whether in anticipation of or
in connection with such Business Combination or otherwise.
(f) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations thereunder (the
"Act") (or any subsequent provisions replacing such Act, rules and
regulations) or the insurance laws and regulations of the State of
Connecticut, if applicable, shall be mailed to all shareholders of the
Corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required by law to be mailed). The proxy or information
statement shall contain on the first page thereof, in a prominent
place, any statement as to the advisability (or inadvisability) of the
Business Combination that the Continuing Directors, or any of them,
may choose to make and, if deemed advisable by a majority of the
Continuing Directors, the opinion of an investment banking firm
selected by a majority of the Continuing Directors as to the fairness
(or not) of the terms of the Business Combination from a financial
point of view to the holders of the outstanding shares of Capital
Stock other than the Interested Shareholder and its Affiliates or
Associates (as hereinafter defined), such investment banking firm to
be paid a reasonable fee for its services by the Corporation.
(g) Such Interested Stockholder shall not have made or caused the making
of any major change in the Corporation's business or equity capital
structure without the approval of a majority of the continuing
Directors.
C. For the purposes of this Article VII:
1. The term "Business Combination" shall mean:
(a) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Shareholder or
(ii) any other corporation (whether or not itself an Interested
Shareholder) which is or after such merger or consolidation would
be an Affiliate or Associate of an Interested Shareholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) with
any Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder involving any assets or securities of this
Corporation, any subsidiary or any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder having an
aggregate Fair Market Value of $10,000,000 or more; or
(c) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder; or
(d) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or
any other transaction (whether or not with or otherwise involving
an Interested Shareholder) that has the effect, directly or
indirectly, of increasing the proportionate share of any class or
series of Capital Stock, or any securities convertible into
Capital Stock or into equity securities of any Subsidiary, that
is beneficially owned by any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder: or
(e) any agreement, contract or other arrangement providing for any
one or more of the actions specified in the foregoing clauses (a)
to (d).
2. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under Article III
of these Articles, and the term "Voting Stock" shall mean all Capital
Stock which by its terms may be voted on all matters submitted to
shareholders of the Corporation generally.
3. The term "person" shall mean any individual, firm, corporation or other
entity and shall include any group comprised of any person and any
other person with whom such person or any Affiliate or Associate of
such person has any agreement, arrangement or understanding, directly
or indirectly, for the purpose of acquiring, holding, voting or
disposing of Capital Stock.
4. The term "Interested Shareholder" shall mean any person (other than the
Corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the
Corporation or any Subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) who (a) is the
beneficial owner of Voting Stock representing ten percent (10%) or more
of the votes entitled to be cast by the holders of all then outstanding
shares of Voting Stock or (b) is an Affiliate or Associate of the
Corporation and at any time within the two-year period immediately
prior to the date in question was the beneficial owner of Voting Stock
representing ten percent (10%) or more of the votes entitled to be cast
by the holders of all then outstanding shares of Voting Stock.
5. A person shall be a "beneficial owner" of any Capital Stock (a) which
such person or any of its Affiliates or Associates beneficially owns,
directly or indirectly; (b) which such person or any of its Affiliates
or Associates has, directly or indirectly, (i) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, convertible
securities, exchange rights, warrants or options, or otherwise, or
(ii) the right to vote pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, convertible
securities, exchange rights, warrants or options, or otherwise, or
(ii) the right to vote pursuant to any agreement, arrangement or
understanding; or (c) which are beneficially owned, directly or
indirectly, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock. For the purposes of
determining whether a person is an Interested Shareholder pursuant to
paragraph 4 of this Section C, the number of shares of Capital Stock
deemed to be outstanding shall include shares deemed beneficially
owned by such person through application of paragraph 5 of this
Section C, but shall not include any other shares of Capital Stock
that may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
6. The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Act as in
effect on March 1, 1984 (the term "registrant" in said Rule 12b-2
meaning in this case the Corporation).
7. The term "Subsidiary" means any corporation of which a majority of any
class of equity security is beneficially owned by the Corporation;
provided, however, that for the purposes of the definition of
Interested Shareholder set forth in paragraph 4 of this Section C, the
term "Subsidiary" shall mean only a corporation of which a majority of
each class of equity security is beneficially owned by the Corporation.
8. The term "Continuing Director" means any member of the board of
directors of the Corporation (the "Board") while such person is a
member of the Board, who is not an Affiliate or Associate or
representative of the Interested Shareholder and was a Member of the
Board prior to the time that the Interested Shareholder became an
Interested Shareholder, and any successor of a Continuing Director,
while such successor is a member of the Board, who is not an Affiliate
or Associate or representative of the Interested Shareholder and is
recommended or elected to succeed the Continuing Director by a majority
of Continuing Directors.
9. The term "Fair Market Value" means (a) in the case of cash, the amount
of such cash; (b) in the case of stock, the highest closing sales
price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York
Stock Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or if such stock is
not listed on such Exchange, on the principal United States securities
exchange registered under the Act on which such stock is listed, or,
if such stock is not listed on any such exchange, the highest closing
bid quotation with respect to a share of such stock as determined by a
majority of the Continuing Directors in good faith; and (c) in the
case of property other than cash or stock, the fair market value of
such property on the date in question as determined in good faith by a
majority of the Continuing Directors.
10. In the event of any Business Combination in which this Corporation
survives, the phrase "consideration other than cash to be received" as
used in paragraphs 2.(a) and 2.(b) of Section B of this Article VII
shall include the shares of Common Stock and/or the shares of any other
class or series of Capital Stock retained by the holders of such
shares.
D. The Board of Directors shall have the power and duty to determine for the
purposes of this Article VII on the basis of information known to them
after reasonable inquiry, (a) whether a person is an Interested
Shareholder, (b) the number of shares of Capital Stock or other securities
beneficially owned by any person, (c) whether a person is an Affiliate or
Associate of another, and (d) whether the assets that are the subject of
any Business Combination have, or the consideration to be received for the
issuance or transfer of securities by this Corporation have, or any
Subsidiary in any Business Combination has, an aggregate Fair Market Value
of $10,000,000 or more. Any such determination made in good faith shall be
binding and conclusive on all parties.
E. Nothing contained in this Article VII shall be construed to relieve any
Interested Shareholder from any fiduciary obligation imposed by law.
F. The fact that any Business Combination complies with the provisions of
Section B of this Article VII shall not be construed to impose any
fiduciary duty, obligation or responsibility on the Board, or any member
thereof, to approve such Business Combination or recommend its adoption or
approval to the shareholders of this Corporation, nor shall such compliance
limit, prohibit or otherwise restrict in any manner the Board, or any
member thereof, with respect to evaluations of or actions and responses
taken with respect to such Business Combination.
G. Notwithstanding any other provisions of these Articles or the bylaws of the
Corporation (and notwithstanding the fact that a lesser percentage or
separate class vote may be specified by law, these Articles or the bylaws
of the Corporation), the affirmative vote of the holders of not less than
eighty percent (80%) of the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock, voting together as a single class,
shall be required to amend or repeal, or adopt any provisions inconsistent
with, this Article VII; provided, however, that this Section G shall not
apply to, and such eighty percent (80%) vote shall not be required for, any
amendment, repeal or adoption unanimously recommended by the Board if all
of such directors are persons who would be eligible to serve as Continuing
Directors within the meaning of Section C, paragraph 8 of this Article VII.
Article VIII
To the full extent permitted by the Connecticut General Statutes as the same
exists or may hereafter be amended, no person who is or was a director of the
Corporation shall be personally liable to the Corporation or its shareholders
for monetary damages for breach of duty as a director in an amount that exceeds
the compensation received by the director for serving the Corporation during the
year of the violation. The limitation of liability of any person who is or was a
director provided for in this Article shall not be exclusive of any other
limitation or elimination of liability contained in, or pursuant to, the
Connecticut General Statutes, as the same exists or may hereafter be amended.
Any repeal or modification of this Article VIII by the shareholders of the
Corporation shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification.
Article IX
The officers and directors of the Corporation shall be indemnified by the
Corporation to the fullest extent permitted by, or pursuant to, the Connecticut
General Statutes, as the same exists or may hereafter be amended. The
Corporation may pay for or reimburse the reasonable expenses incurred by a
director who is a party to a proceeding in advance of final disposition of the
proceeding if such director is in full compliance with Section 33-773 of the
Connecticut Business Corporation Act, as the same exists or may hereafter be
amended. Any repeal or modification of this Article IX shall not adversely
affect any right or protection of a director or officer of the Corporation
existing at the time of such repeal or modification.
Exhibit (3)(ii)
BYLAWS
of
HSB GROUP, INC.
ARTICLE I
SHAREHOLDERS' MEETINGS
All meetings of the Shareholders shall be held in the City of Hartford
or such other place within Connecticut as the Board of Directors may appoint.
The Annual Meeting shall be held on the 3rd Tuesday of April in each year or on
some other day within two (2) months thereafter as fixed by the Board of
Directors. Special meetings of the Shareholders may be held at such time as
fixed by the Board of Directors. Notice of every meeting of the Shareholders and
of the time and place thereof shall be given as required by law. At each meeting
of the Shareholders the President or Chairman of the Board shall preside and act
as Chairman. The Chairman may appoint a Committee on Proxies to receive, count
and report the votes cast in person at such meeting and the votes represented by
proxies. The holders of a majority of the shares of the issued and outstanding
stock entitled to vote at a meeting, present either in person or by proxy, shall
constitute a quorum for the transaction of business at such meeting of the
Shareholders. If a quorum is not present at such meeting, the Shareholders
present in person or by proxy may adjourn to such future time as shall be agreed
upon by them, and notice of such adjournment shall be given to Shareholders not
present or represented at the meeting.
Regulations for the conduct of a meeting of Shareholders may be
prescribed by the Chairman or at the Chairman's option be adopted by the
Shareholders present by voice vote or by ballot.
At any meeting of the Shareholders, only such business may be conducted
as shall have been properly brought before the meeting and as shall have been
determined to be lawful and appropriate for consideration by Shareholders at the
meeting. To be properly brought before a meeting business must be (a) specified
in the notice of meeting, (b) otherwise properly brought before the meeting by
or at the direction of the Board of Directors or the Chairman of the meeting, or
(c) otherwise properly brought before the meeting by a Shareholder. For business
to be properly brought before a meeting by a Shareholder pursuant to clause (c)
above, the Shareholder must have given timely notice thereof in proper written
form to the Corporate Secretary. To be timely, a Shareholder's notice to the
Corporate Secretary must be delivered to or mailed and received by the Corporate
Secretary of the Company not less than sixty nor more than ninety days prior to
the anniversary of the date on which the immediately preceding Annual Meeting of
the Shareholders was convened; provided, however, that in the event that the
Annual Meeting is called for a date that is not within thirty days before or
after such anniversary date, notice by the Shareholder in order to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the Annual Meeting was mailed or
such public disclosure of the date of the Annual Meeting was made, whichever
first occurs. Such Shareholder's notice shall set forth as to each matter the
Shareholder proposes to bring before the meeting (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (b) the name and record address of such
Shareholder, (c) the class and number of shares of capital stock of the Company
which are beneficially held by such Shareholder and (d) any material interest of
such Shareholder in such business. Notwithstanding anything in these Bylaws to
the contrary, no business shall be conducted at a meeting except in accordance
with the procedures set forth herein. The Chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the procedures set forth
herein, or that business was not lawful or appropriate for consideration by
Shareholders at the meeting, and if the Chairman of the meeting should so
determine, the Chairman of the meeting shall so declare to the meeting and any
such business not properly brought before the meeting shall not be transacted at
that meeting.
Nominations of persons for election to the Board of Directors of the
Company may be made by the Board of Directors or by any Shareholder entitled to
vote for the election of Directors in compliance with the notice procedures set
forth herein. Any Shareholder entitled to vote for the election of Directors at
a meeting may nominate persons for the election of Directors only if timely
written notice of such Shareholder's intent is given to the Corporate Secretary.
To be timely, a Shareholder's notice to the Corporate Secretary must be
delivered to or mailed and received by the Corporate Secretary of the Company
not less than sixty days nor more than ninety days prior to the anniversary of
the date on which the immediately preceding Annual Meeting of the Shareholders
was convened; provided, however, that in the event that the Annual Meeting is
called for a date that is not within thirty days before or after such
anniversary date, notice by the Shareholder in order to be timely must be
received not later than the close of business on the tenth day following the day
on which such notice of the date of the Annual Meeting was mailed or such public
disclosure of the date of the Annual Meeting was made, whichever first occurs.
Such Shareholder's notice shall set forth (a) as to each person whom the
Shareholder proposes to nominate for election or re-election as a Director, (i)
the name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of capital stock of the Company which are beneficially owned by such
person and (iv) any other information relating to such person that is required
to be disclosed in solicitations of proxies for election of Directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including, without limitation such person's
written consent to being named in the proxy statement as a nominee and to
serving as a Director if elected) and (b) as to the Shareholder giving the
notice, (i) the name and address, as they appear on the Company's books, of such
Shareholder and, (ii) the class and number of shares of capital stock of the
Company which are beneficially owned by such Shareholder. If the Chairman of the
meeting determines that a nomination was not in accordance with the foregoing
procedures, such nomination shall be void.
ARTICLE II
DIRECTORS
The Board of Directors shall consist of the number of directors fixed
from time to time by resolution adopted by the affirmative vote of a majority of
the entire Board of Directors. No person shall serve as Director beyond the date
of the first Annual Meeting of Shareholders held subsequent to the Director's
seventieth birthday.
Regular and special meetings of the Board of Directors shall be held as
determined by the Directors.
At any meetings of the Board of Directors, a majority of the Directors
then in office, but not less than one-third of the directorships fixed in
accordance with this Article, shall constitute a quorum for the transaction of
business. Unless otherwise prescribed herein or in the Articles of Incorporation
of the Company, action of the Board of Directors shall be by majority vote of
the Directors present. The compensation of Directors shall be determined by the
Board of Directors.
ARTICLE III
COMMITTEES
The Board of Directors may by resolution designate two or more
Directors to constitute an executive committee or other committees, which
committees shall have and may exercise all such authority of the Board of
Directors as shall be provided in such resolution, subject to such limitations
as are provided under Section 33-753 of the Connecticut General Statutes, as it
may be amended from time to time.
The Board of Directors may by resolution designate one or more
Directors as alternate members of such committees who may replace any absent
member at any meeting of such committees upon such notice and in such manner as
may be provided in the resolution designating such alternate members.
ARTICLE IV
OFFICERS
There shall be a President and there may be a Chairman of the Board,
each elected by the Board of Directors from their own number. The President
shall be the chief executive officer and responsible under the direction of the
Board of Directors for the supervision, management and active control of the
affairs and properties of the Company.
The Board of Directors may also elect a Corporate Secretary, a
Treasurer, one or more Executive Vice Presidents and Senior Vice Presidents.
The President shall appoint such other Officers as may be required for
the prompt and orderly transaction of the business of the Company.
Any elected Officer may be removed at the pleasure of the Directors
and any appointed Officer may also be removed by the President.
The Officers shall be subject to the direction of and shall have such
authority and perform such duties as may be assigned from time to time by the
Board of Directors or the President.
ARTICLE V
AMENDMENTS
These bylaws may be altered, amended, added to or repealed by a
majority of the entire Board of Directors at any meeting of said Board, provided
that notice thereof shall have been given in the notice of such meeting.
Exhibit (21)
LIST OF SUBSIDIARIES OF HSB GROUP, INC.*
STATE/JURISDICTION OF
NAME OF COMPANY INCORPORATION/FORMATION
- --------------- -----------------------
The Hartford Steam Boiler Inspection and Connecticut
Insurance Company**
1) The Allen Insurance Company Bermuda
2) EIG Co. Delaware
a) HSB Engineering Insurance Limited England
(i) The Boiler Inspection and Insurance
Company of Canada Canada
3) The Hartford Steam Boiler Inspection
and Insurance Company of Connecticut Connecticut
4) The Hartford Steam Boiler Inspection
and Insurance Company of Texas Texas
5) Hartford Steam Boiler Inspection
Technologies California
6) Hartford Steam Boiler International GmbH Germany
7) Hartford Steam Boiler (Singapore) PTE Ltd. Singapore
8) HSB Associates, Inc. New York
a) One State Street Intermediaries Connecticut
9) HSB Club, Inc. Connecticut
10) HSB Investment Corporation Connecticut
11) HSB Professional Loss Control, Inc. Tennessee
12) HSB Reliability Technologies Corporation. Florida
a) Hemisphere Consulting Corporation. Florida
13) The Polytechnic Club, Inc. Connecticut
14) Radian Corporation Texas
a) Radian International L.L.C. Delaware
(40% Owned by Radian Corporation )
15) Ra-Hart Investment Company Texas
* This list omits certain subsidiaries which considered in the aggregate as a
single subsidiary, would not constitute a significant subsidiary.
** Companies numbered one through fifteen below are subsidiaries of The Hartford
Steam Boiler Inspection and Insurance Company.
